How PFOF Affects Massachusetts Investors
Massachusetts has historically been the most aggressive state securities regulator in the country. Secretary of State William Galvin has brought landmark PFOF-related enforcement actions. Massachusetts investors deserve continued robust enforcement as Citadel's practices persist.
The Scale in Massachusetts
Massachusetts has an estimated 1.5 million Massachusetts retail investors — in a state with historically aggressive securities enforcement. Each of these investors who uses a PFOF-dependent discount broker — Robinhood, TD Ameritrade, E*Trade, Charles Schwab, or Webull — is routing their orders to Citadel Securities without their knowledge or consent. Citadel captures a spread on each of these trades, generating revenue that flows back to Kenneth Griffin while providing retail investors with marginally inferior execution prices compared to what competitive exchange routing would provide.
Massachusetts's financial hub in Boston has sophisticated financial professionals who understand these dynamics. But most Massachusetts retail investors — those in Worcester, Springfield and throughout the state — are unaware that their "free" trades are funded by a practice that systematically extracts value from them.
Kenneth Griffin's Political Investment in Massachusetts
Kenneth Griffin has given millions through national Republican organizations. His key recipients include national Republican committees that have targeted Massachusetts congressional seats. This political investment creates a documented relationship between the CEO of America's dominant retail market maker and the political figures responsible for overseeing financial regulation in Massachusetts.
- National Republican Senatorial Committee — $1,000,000 (2020, Federal Super PAC)
- Congressional Leadership Fund — $1,000,000 (2022, Federal Super PAC)
What Massachusetts Regulators Could Do
Massachusetts Secretary of the Commonwealth and Securities Division have already taken enforcement actions related to PFOF and best execution. Attorney General Andrea Campbell could amplify this work under the Massachusetts Consumer Protection Act (M.G.L. c. 93A). Massachusetts should lead the nation in a multistate PFOF investigation.
What Massachusetts Investors Can Do Now
Massachusetts retail investors who believe they have been harmed by PFOF-driven execution quality degradation can take several steps:
- File a complaint with the Massachusetts Securities Division at https://www.sec.state.ma.us
- File a complaint with the Massachusetts Attorney General at https://www.mass.gov/orgs/office-of-the-attorney-general
- File a complaint with the SEC at sec.gov/tcr
- File a complaint with FINRA at finra.org
- Consider switching to a broker that does not use PFOF, such as Fidelity or Interactive Brokers direct routing